The freeze on new foreclosures is starting to crack, a report out today says.

Foreclosure starts – or when a lender files paperwork to begin the foreclosure process – jumped 28% in January compared with December, although starts were down 11.5% from the same month in 2011, according to data firm Lender Processing Services.

At the same time, foreclosure sales, or sales by banks of homes repossessed by lenders, jumped 29% in January. Most of the increase in starts came from judicial states, where foreclosures must be approved by courts. These include Florida, New Jersey and New York. According to LPS, these states saw twice the increase in foreclosure starts than states with a non-judicial foreclosure process, which include California, Arizona and Nevada. Read More »

The number of U.S. homeowners owing more on their home loans than their properties are worth increased at the end of last year, highlighting a continuing source of weakness for the economy.

CoreLogic, a real estate data provider, said Thursday that 11.1 million, or 22.8%, of American households with a mortgage were “under water” at the end of last year. That was up from 10.7 million, or 22.1%, of properties in the third quarter of 2011.

The figures were the highest level of negative equity since the third quarter of 2009, when CoreLogic started reporting negative equity statistics using its current methodology. Read More »

The number of U.S. households delinquent on their mortgage payments fell below 8% in the third quarter on a seasonally adjusted basis, down from 9.1% one year ago to the lowest level since the end of 2008, according to the Mortgage Bankers Association.

Around 4.4% of all households were in some stage of foreclosure, a number that is essentially unchanged over the past year. The share of mortgages that had missed one payment during the third quarter fell to 3.2%, down from 3.5% last quarter to the lowest level in more than four years.

The decline in delinquencies is good news for the housing market and the economy. It follows a surprise uptick earlier this year that had raised concerns that the mortgage crisis was worsening. Read More »

Highly ranked school districts may have been spared the worst of the foreclosure crisis, according to a new analysis, showing that the housing crash was akin to a tornado that tore through wide swaths, but hit with particular force in certain areas.

The analysis, conducted for Developments by Location Inc., a Worcester, Mass.-based company that mines local data for businesses and consumers, looked at six months of 2011 sales data collected by RealtyTrac Inc. It showed that the percentage of foreclosure (or “real-estate-owned”) sales went down as the school ranking went up in five metro areas – Jacksonville, Fla; Atlanta; Toledo, Ohio; Stockton, Calif.; and Seattle. Higher-rated school districts also maintained higher home-sale prices, and higher home prices per square foot.

“If you are looking to buy into one of these good school districts, it is very rare to find a foreclosure,” said Location Inc.’s chief executive Andrew Schiller, an expert in demographic analysis who conducted the research with his colleague Jonathan Glick. “It’s better to just go into a normal sale.” (The five cities were chosen to provide a general market overview.)

The finding is, to a certain extent, not a surprise. Schools have long been a driver for home buyers, whether in determining location or timing. So it would make sense that school ranking could serve as a kind of proxy for measuring the damage from the foreclosure crisis. Read More »

Foreclosure filings rose by 7% in October from the previous month to the highest level in seven months, offering a sign that banks are slowly working through the procedural fixes required by regulators as a result of processing abuses that surfaced last fall.

But the latest figures from RealtyTrac, which tracks foreclosure filings, showed that foreclosure notices issued by banks were down by 31% from one year ago, when banks were forced to slowdown or suspend foreclosures after robo-signing and other control frauds surfaced. James Saccacio, chief executive of RealtyTrac, said the numbers show “strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year.”

Foreclosure remains a state-by-state process, and more states are beginning to scrutinize banks’ paperwork. As we noted on Monday, default notices plunged in Nevada after a new state law took effect last month requiring tougher penalties for submitting documents that falsely recorded title transfers. Read More »

The report from banking regulators underscores how any renewed weakness in the job market could ripple through the housing market. If unemployment rises, that means more Americans will have trouble keeping up with their mortgage payments, leading to more foreclosures.

While mortgage delinquencies typically show a seasonal increase in the second quarter from the first quarter, analysts said it was possible that the soft job market was leading more people to fall behind on their mortgages than was usual for this time of the year. Some 12% of borrowers had missed at least one mortgage payment or were in foreclosure during the second quarter, up from 11.4% in the first quarter. “It’s something to not be overly worried about, but it’s something to clearly watch to see where this is going,” said Joseph Evers, the OCC’s deputy comptroller for large bank supervision. Read More »

The nation’s foreclosure crisis is easy to identify, but solutions have so far eluded the best and brightest. Still, past failures haven’t deterred new attempts to clear the glut of foreclosures weighing heavily on the balance sheets of both banks and the federal government.

On Tuesday a Senate subcommittee met in Washington for a hearing to discuss and debate some these new ideas. Granted, hours of congressional testimony don’t usually provide fodder for blogs, but some ideas presented Tuesday are worth highlighting.

The hearing was prompted, in part, by the Obama administration asking investors for ideas on how to turn thousands of foreclosed homes owned by the government into rentals. (Lots of investors are already clamoring for a way into the single-family rental market.)

Here’s a quick rundown of ideas presented at Tuesday’s hearing: Read More »

Yet another federal foreclosure-prevention effort is likely to reach fewer homeowners than initially hoped. The Obama administration now says it expects to miss its goal of signing up 30,000 U.S. homeowners for a new program that helps the unemployed avoid foreclosure.

The $1 billion effort, created in the Dodd-Frank financial overhaul last year, is being run by the Department of Housing and Urban Development. Known as the Emergency Homeowners’ Loan Program, it provides unemployed homeowners with short-term loans so they can continue making their mortgage payments.

The administration was delayed in launching the effort for several months. It needed to hash out agreements with state agencies, the nonprofit housing network NeighborWorks America and a financial-processing firm helping to run the program. Homeowners in 27 states and Puerto Rico had until Sept. 15 to apply, and all borrowers need to be approved for loans by the end of this month. Read More »

Mr. Ranieri, considered by many to be the godfather of the U.S. housing-finance market for his role developing the mortgage-backed security, didn’t pull any punches in an address to the North Carolina Bankers Association in Raleigh. The industry and policy makers are engaged in “self-interested bickering” over who will bear the cost of needed overhauls while the housing market is rotting, he said.

Mr. Ranieri warned that millions of bank-owned foreclosures and loans that haven’t paid mortgage payments in more than one year “are dragging the nation’s economy underwater,” he said. “Yet in truth we seem very paralyzed and slow to act.” Read More »

A new working paper from economists at the International Monetary Fund finds that counties that had higher shares of mortgages sold by lightly regulated independent lenders also had higher foreclosure rates, a finding that suggests lax regulation of mortgage lending may have fueled the housing bubble.

The paper uses econometric analyses to show how these non-bank, independent originators contributed to riskier lending at a disproportionate rate relative to more-heavily regulated banks. “The market share of these independents as of 2005 is a strong predictor of the increase in foreclosure rates between 2005 and 2007,” write IMF economists Jihad C. Dagher and Ning Fu.

The findings, of course, don’t absolve banks. Instead, they argue that mortgage brokers and non-bank originators, such as Ameriquest, New Century, and WMC Mortgage, “contributed disproportionately” to the credit bubble. (Consumer advocates have also criticized bank regulators for failing to do anything to stem a deterioration in mortgage lending and for preempting more aggressive efforts by states to head off risky practices.)

The research suggests that deregulation played a significant role in fueling the mortgage boom and bust. It takes data on foreclosures, home prices, and the market share of independent lenders to make a series of findings: Read More »